Why is my home lender wanting to drop my interest rate by 2%?
by Mortgage Rates on Monday, November 8th, 2010 | 4 Comments
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To keep you from shopping around, and moving to another company.
If they’re offering you 2%, out of the blue, ask them for 4%. OR, make a few calls, and see what the actual going rate is for the balance on YOUR account.
At the same time, check your equity amount – if it’s recently gone above 20%, now is ALSO the time to ask them to take off the PMI coverage.
What kind of loan do you have now and what are they proposing to modify it to? There is probably more changing than just the interest rate.
Are you on an FHA loan now? If so they are offering you a streamline refinance. My company is also offering this to our FHA customers- This is a refinance just to reduce your rate & FHA requires no new appraisal, credit check, or income proof. These are done to help you since you are already on FHA it is to their benefit to help you also. How it benefits them is that you don’t go elsewhere to refinance & they keep your business.
This is called a loan modification. There is some federal money for lenders to do this type of thing. Have an attorney look at your papers, or read them carefully yourself.
Some years ago my lender offered me a loan modification–don’t know why, but paid small sum (was it $50 or $500) and lowered my interest rate. Figure they got to keep me rather than having me leave them and doing refi. Worked out well for us. . . .but you’re right to be caustious.